Title and Security

Title and Security

I think it’s reasonable to suggest that when most people think of property what mainly attracts their immediate attention are factors like location, design, price, facilities and lifestyle. A little lower down on the check list would be the properties title and how that underpins the future owner’s purchase and indeed the security of the entire market. Since, without secure title the other topics are a mirage.

The importance of security of title sprang to mind for two reasons, first the revelations of the current banking royal commission reminds us how important trust and security are and, secondly the $30 million move by ASX and Info Track to establish a competitor service to PEXA (Property Exchange Australia) in the estimated $200 million e-Conveyancing market.

e-Conveyancing is a new property-related system encouraged by the Commonwealth Government that takes away almost all of the manual processes and paperwork now associated with property settlements. PEXA allows lawyers, conveyancers and financial institutions to all deliver transacts online, enabling documents to be lodged and the completion of related financial settlements electronically.

It also reduces the risk of errors and delays which, is good news for anyone buying and selling property and for developers with many settlements over large projects.

The ASX and Info Track with their venture Sympli will soon join the PEXA service which is owned by the big banks and the State Government.

An Economy-Wide Fundamental

Secure land title and tenure is summed up by the World Bank as ‘secure land rights are an important fundamental to stimulating investment growth and as a central capital asset helps to create a dynamic market and social inclusion.’

That’s a pretty big statement and when it comes to the benefits of secure title it’s something we take for granted. What’s notable is that Australia has always lead the filed in this foundation element of law and property.

Security of title lets you know exactly and legally what you are buying, it’s essential for the seller, as it certifies details of the property being sold.

Sound title is essential to secure mortgages and some related finance. Governments rely upon land-title because they can identify individual owners for taxation purposes, thus accurate title details help give governments access to essential revenue streams that include rates, land tax, stamp duty and capital gains tax.

It’s easy to see how so much of our economy is linked to secure title and we can only imagine the consequences if we had a poor or unreliable system of title, things would soon fall apart and be a chaotic mess.

Thankfully this does not apply to Australia, just the opposite as we’ve been and still are leaders in the evolution of laws that govern real property title and management however, it’s interesting to note that only 30% of the world today have legally regulated land title. The most common form is land held as title in Fee Simple in countries that include Australia, Canada, The United Kingdom, the US and New Zealand.

Australian Innovation

Two key facts demonstrate our lead in this important area. In 1863 New South Wales introduced Torrens Title via the Real Property Act which was at the time a major departure from old-system title which, relied upon continuous and at times cumbersome documentation.

Then in 1983 NSW was the first jurisdiction in the world to introduce a computerised system of title registration and with PEXA aspects of that foundation system are now moving to a full on-line platform of e-Conveyancing and associated title management.

Under Torrens Title the most basic document is the Certificate of Title or CT, this shows five essential details regarding the land; who owns the land, easements, covenants (restrictions on the land), caveats (warnings of other possible interests over the land) and registered mortgages.

The system is very secure and so unlike many other countries, title insurance is rarely purchased in NSW. The integrity of the 150-year old system of registration is sound and there’s almost negligible land fraud. Records indicate that no more than five claims a year against the Torrens Assurance Fund.

Another significant fact is that our system of title is such a robust and reliable one that it’s been exported to other countries. While in April 2017, the 150-year old land titles office was leased for 35 years yielding the NSW State Government $2.6b, an example that other states now following.

Australia may well have taken the lead in land title management because we did not historically have any form of feudal land tenure with land rights vested in the crown. Feudal title was also more often related to stewardship and less to do with ownership. However, historically there were many early colonial land-grants and in 1993 Native Title was introduced.

As a young country Australia’s land title system was less complex and today remains the foundation of land ownership playing an important role in the stability of our economy, land use planning and development.

As Australia moves to a full system of e-Conveyancing we are set to further enhance our reputation as a world-leader in property title innovation. e-Conveyancing appears to sit very comfortably and logically with how buyers search for property and by reducing any potential delays the entire industry should benefit.

Project Agenda is dedicated to the many and varied aspects of Residential Project Marketing. The core idea, championed by Peter Chittenden, is to highlight not only market trends, but to also examine some of the many unique aspects associated with apartment living across a constantly evolving demographic. Comments, ideas and suggestions are always welcome.